Dow Jones Industrial Average (.DJI) unstoppable under the influence of President Trump

Dow Jones Industrial Average (.DJI) unstoppable under the influence of President Trump

Dow Jones Industrial Average (.DJI) unstoppable under the influence of President Trump

The stock market has been unstoppable under the influence of President Trump.

The Dow Jones Industrial Average crossed 28,332.74 on Monday, meaning it has rallied 10,000 points, or more than 54 percent, since Trump’s election victory on November 8, 2016. The benchmark S&P 500 has gained more than 46 percent.

“The rally has been driven by pro-growth measures, de-escalation of trade tensions, huge liquidity injections by central banks and a FOMO approach by investors worried about missing out on a remarkable U.S. market outperformance that has set one record high after the other.” Mohamed El-Arian, chief economic adviser at Allianz, told FOX Business.

The gains show why U.S. markets have become the envy of the world under Trump, who has followed through on his promises of cutting taxes and regulations and rewriting global trade deals in America’s favor.

By comparison, global exchanges such as Hong Kong’s Hang Seng and Britain’s FTSE have gained 20.4 percent and 6.4 percent, respectively, since Trump’s election win, while China’s Shanghai Composite has lost 7.2 percent, according to Dow Jones Market Data Group. Of the major global averages, only Japan’s Nikkei, up 44.1 percent, has come close to the gains of the U.S. markets.

U.S. investors’ holdings have benefited from Trump’s pro-business agenda. He has lowered income tax rates for individuals, cut corporate taxes and rolled back a number of regulations, including restrictions on the country’s biggest banks.

Trump also negotiated the United States-Mexico-Canada Agreement, which overhauls the Clinton-era North American Free Trade Agreement, commonly known as NAFTA, and has embarked on a nearly 21-month-long trade war against China, which he says has “been taking advantage” of the U.S. for years.

This week, Democrats in the House backed the USMCA after months of negotiation, and an initial trade deal with China was reached. Both deals are expected to provide a tailwind for a stock market, and an economy, that have been on fire in the past four months.

The Dow Jones index, for instance, has gained 11.2 percent since bottoming out on Aug. 14.

David Kostin, chief US equity strategist at Goldman Sachs, thinks the stock market’s recent success suggests “the pace of U.S. economic growth will improve in the near future.”

His team points to Fed rate cuts along with the bottoming of the inventory cycle as reasons, in addition to the easing of trade tensions with China.

Morgan Stanley Equity Strategist Michael Wilson, who recently released his year-end 2020 S&P 500 outlook, has a base-case target of 3,000 – almost 5 percent below current levels.

He expects the US economy to “muddle through in 2020,” but is concerned that earnings growth will disappoint.

Bob Doll, chief economist at Nuveen Investments, partly agrees. He told FOX Business’s Maria Bartiromo that the recession fears from December 2018 and August are “dissipating,” leading to the stock market’s rally.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 28,706.78.

The projected lower bound is: 27,831.49.

The projected closing price is: 28,269.13.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 75.8354. This is not an overbought or oversold reading. The last signal was a sell 3 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 64.37. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 11 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 124.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 7 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed up 100.510 at 28,235.891. Volume was 14% above average (neutral) and Bollinger Bands were 45% narrower than normal.

Open     High      Low     Close     Volume___
28,191.67028,337.49028,191.67028,235.891 286,767,520
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 27,905.14 27,445.90 26,586.59
Volatility: 11 10 14
Volume: 241,427,936 245,744,176 268,783,168

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

DJ INDU AVERG is currently 6.2% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .DJI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .DJI and have had this outlook for the last 3 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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